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The theft of intellectual property from the US is "unprecedented" and costing
the nation an estimated $300bn ( 200bn) each year, a report says.
The study, led by former top-ranking officials, said China was thought to be
behind 50-80% of the theft.
Stronger deterrent measures that made IP theft unprofitable were needed, the
report said.
These included banking sanctions and import or investment curbs on companies
failing to protect IP rights.
The non-partisan private commission was co-chaired by Dennis Blair, Mr Obama's
former director of national intelligence, and Jon Huntsman, former US
ambassador to China and Republican presidential candidate.
Its report comes weeks before a summit of the US and Chinese presidents, set
for 7 and 8 June, at which the issue of Chinese cyber espionage is likely to be
raised.
Earlier this month, the Pentagon for the first time directly accused the
Chinese government and military of targeting US government computers as part of
a cyber espionage campaign aimed at collecting intelligence on US diplomatic,
economic and defence sectors.
China called the report "groundless", saying it represented "US distrust".
'Consequences needed'
The report, released on Wednesday by the Commission on the Theft of American
Intellectual Property, said IP theft cost America jobs and suppressed
innovation.
"The scale of international theft of American intellectual property (IP) is
unprecedented - hundreds of billions of dollars per year, on the order of the
size of US exports to Asia," it said.
China, it said, was "the world's largest source of IP theft", with Russia and
India other actors, as well as other countries.
"National industrial policy goals in China encourage IP theft, and an
extraordinary number of Chinese in business and government entities are engaged
in this practice," the report said.
Foreign IP was also less protected by "weaknesses and biases" in China's legal
and patent systems, it said.
As well as cyber espionage, it pointed out that most IP theft took place the
"old-fashioned way", through bribed employees, on-site theft and
re-engineering.
Current legal avenues for addressing theft were inadequate. "IP theft needs to
have consequences, with costs sufficiently high that state and corporate
behaviour and attitudes that support such theft are fundamentally changed," it
said.
The report made a number of recommendations, including giving the national
security advisor responsibility for responding to IP theft.
The Treasury should be given the power to block entities benefiting from IP
theft from the US banking system, while measures blocking goods benefiting from
stolen IP from the US should be strengthened.
More resources should also be given to the FBI and Department of Justice to
prosecute IP theft, it said.
On cyber-hacking, it stopped short of calling for revising laws to allow
"offensive cyber" - recovering stolen files or damaging a hacker's network,
citing fears of damage to third parties.
But it said "informed deliberations" on how companies could legally conduct
"threat-based deterrence operations against network intrusion" should be
undertaken.
Mr Huntsman said he expected the issue to be raised at the upcoming
presidential summit.
"The president sets the priorities for the US-China relationship, and this
clearly would have to be at the top of our economic agenda," he said.